TRADE POLICY REVIEW:
Concluding remarks by the Chairperson
- Trade Policy Review: European Union
This fourteenth Trade Policy Review of the European Union (EU) has allowed Members to take a close look at the economic, trade, and investment policies of the world's biggest trader of goods and services during the period up until September 2019. I would like to thank both Mrs. Sabine Weyand, Director-General of DG Trade, and Ambassador João Aguiar Machado for their forthright and active engagement. My gratitude also goes to our discussant, Ambassador Alexandre Guido Lopes Parola, for his thoughtful comments and remarks and of course last, but not least, to the 62 delegations that took the floor during these two days and all the delegations for their kind attendance.
Members noted that the EU economy had performed well in 2017-18, but slowed somewhat in the second half of 2018 due to several factors, including escalating trade tensions and global uncertainties. It was also noted that many recent EU policy initiatives aimed to further harmonize the EU's single market, which was a welcome development, but that certain areas, such as fiscal policies, remained divergent among member States. The EU remains the largest market in the world, and the most important trading partner for some 80 economies.
The EU was complimented for being a strong supporter and defender of the rules-based multilateral trading system; its leadership role was particularly commended. Many Members looked to the EU at this difficult juncture to help resolve the situation with respect to the Appellate Body, lead reform efforts, help re-launch the negotiating function, and propel the WTO to a successful outcome at MC12. Members were further appreciative of the EU's leadership and engagement in the Joint Statement Initiatives on e-commerce, investment facilitation, MSMEs, and domestic regulation in services. The EU had led by example in many areas including by complying with WTO notification requirements and incorporating gender equality in its trade agreements and policies.
In general, Members were of the view that the EU trade and investment regime remained oriented towards open markets. The EU had also taken measures to further facilitate trade, and its single window initiative continues to be gradually implemented. The EU's applied tariff structure did not change significantly since the last Review, and its simple average MFN tariff rate remains at 6.3%. MFN applied rates are generally identical, or close, to the WTO bound rates.
While many Members recognised the importance of trade with the EU under the multilateral trading system, they noted with appreciation the advantageous trade regimes in place between them and the EU to further liberalize trade, such as Free Trade Agreements and Economic Partnership Agreements and other regional arrangements. Many developing and LDC Members were particularly appreciative of the preferences granted through the EU's Generalized Scheme of Preferences (GSP), the Everything But Arms (EBA) special arrangement, as well as other forms of development support, technical assistance and capacity building they received from the EU and its member States.
Many Members did pose questions and raised concerns regarding certain EU sanitary and phytosanitary measures which in their view were not based on science nor on international standards and did not provide adequate opportunity to take into account views of third countries. Measures regarding the setting of maximum residue levels were often mentioned in this respect. Similar concerns were expressed about EU technical regulations and standards, for example with respect to rules on medical devices and chemicals. We thank and take note of Ambassador Aguiar Machado's remarks on these issues.
While noting that the EU's Common Agricultural Policy (CAP) had not undergone revision during the review period, there had been a few notable developments such as the movement towards market orientation and away from trade-distorting measures and the elimination of sugar production quotas. The elimination of EU export subsidies pursuant to the Nairobi Ministerial Declaration was also praised. However, these developments were seen as not enough by many Members who reiterated several of their longstanding concerns in the agricultural sector, including high tariff rates, the use of non-ad valorem or other complex duties, high levels of domestic support, and management of TRQs.
As a key market and source of supply of fish and fisheries products, the EU has been an important player in the current negotiations to eliminate fisheries subsidies. The EU was urged by Members to reduce its level of subsidies, avoid reintroducing subsidies for purchase, renovation, and new fishing vessels, and contribute constructively to reach an agreement at MC12. It was also pointed out that significant barriers to market access existed as a result of high tariffs and preferential regimes.
It was noted that the EU continued to be a significant user of trade remedies although there was a trend of fewer initiations which was seen as a positive sign. The EU had introduced new regulations during the review period with a view to modernising and updating rules to keep pace with global challenges; however, these raised a number of questions such as how environmental and social considerations would be taken into account. Members also raised some concerns with regard to the continued application of the safeguard measure on steel products including its compatibility with WTO rules, the creation of new terminologies, and the new methodologies employed in the calculation of dumping margins.
Many delegations mentioned the importance of their trade and investment relationship with the EU, as quite often the EU was a top source or destination for these investment flows contributing to further growth and development. Recent policy developments, such as the new EU cooperation mechanism for the screening of FDI, were viewed by some Members as creating uncertainties regarding the future direction and openness of the EU's investment regime. Clarification was also sought on the re-negotiation of bilateral investment treaties at the EU level, and the decoupling of investment protection provisions from trade agreements.
Regarding energy and climate change policies, the EU was praised for its goal of becoming the first carbon neutral continent by 2050 and for the recent call by the EU Commission to end fossil fuel subsidies. Members expressed interest in the EU's Green Deal policy recently announced and the possible introduction of a carbon border adjustment mechanism. Concerns were expressed regarding certain aspects of EU rules on renewable energy.
Naturally the impact on the EU and the world economy of the United Kingdom's withdrawal from the EU is being observed carefully by Members. The EU indicated that the UK remains covered by the EU's commitments and concessions on goods and services during the transition period planned to last until 31 December 2020. Members expressed great interest in the negotiations under GATT Article XXVIII on the apportionment of the EU's bound tariff rate quotas. In this regard, Members expected the process to be inclusive and provide compensation, where necessary, to maintain access. The point was also made that negotiations between the UK and the EU on their future trade relationship should not adversely affect interests of third countries.
The EU received more than 1,600 written questions prior to this Trade Policy Review, and it has already responded to most of them. In a month's time, Members should receive replies to late submissions and follow-up questions that are still outstanding, which will then mark the successful conclusion of this TPR.
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